Department of Defense DIRECTIVE4 AD-A269 186 July 26, 1989 NUMBER 1000.11 1 SUBJECT: Financial Institutions on DoD Installations C, DoD References: (a) DoD Directive 1000.11, subject as above, February 3, 1986 (hereby canceled) (b) DoD Instruction 1000.10, "Procedures Governing Credit Unions... on DoD Installations," July 26, 1989 (c) DoA Instruction 1000.12, "Procedures Governing Banking " Offices on DoD Installations," July 26, 1989 (d) Title 12, United States Code, Section 265 (e) through (j), see enclosure 1 A. REISSUAŽCE AND PURPOSE This Directive: 1. Reissues reference (a) and updates policies and responsibilities for financial institutions that serve DoD personnel on DoD installations worldwide. Associated procedures are contained in references (b) and (c). 2. Ensures that arrangements for the provision of services by financial institutions are consistent among DoD Components, and that financial institutions operating on DoD installations provide, and are provided, support consistent with the policies stated herein. B. APPLICABILITY This Directive applies to the Office of the Secretary of Defense (OSD), the Military Departments, the Joint Chiefs of Staff (JCS), the Joint Staff and the supporting Joint Agencies, the Unified and Specified Commands, the Inspector General of the Department of Defense (IG, DoD), the Uniformed Services University of the Health Sciences (USUHS), the Defense Agencies, and the DoD Field Activities (hereafter referred to collectively as "DoD Components"). C. DEFINITIONS Terms used in this Directive and in references (b) and (c) are defined in enclosure 2. 7K g. D. POLICY 0 1. Duly chartered financial institutions may be authorized to provide r '. services, where demonstrated and justified needs exist, to facilitate the administration of public and quasi-public monies and enhance the morale and welfare of DoD personnel. 93-21162 "0... S "S S 5llA
uieclaimu NOTICE THIS DOCUMENT IS BEST QUALITY AVAILABLE. THE COPY FURNISHED TO DTIC CONTAINED A SIGNIFICANT NUMBER OF PAGES WHICH DO NOT REPRODUCE LEGIBLY.
2. Financial institutions shall be established on DoD installations only after approval by the appropriate regulatory agency and the DoD Component concerned. a. Independent or branch banks, full-service credit unions, and savings associations are the preferred sources of on-base service at domestic installations. b. Banking facilities shall be established on DoD installations only when a demonstrated and justified need cannot be met through other means. Normally, banking facilities shall be used only at overseas locations and in States that prohibit branch banking. In times of mobilization, it may become necessary to designate additional banking facilities as an emergency measure. Upon recommendation by a DoD Component, banking facilities are designated by the Treasury Department under 12 U.S.C. 265 (reference (d)). c. The extension of banking facility and credit union services overseas is encouraged, consistent with the policies stated herein and with pertinent status of forces agreements, bilateral arrangements, and local laws. d. Retail banking operations shall not be performed by DoD activities. DoD Components shall rely on commercially available sources in accordance with DoD Directive 4100.15 (reference (e)). However, proposals to seek the provision of financial services by institutions off the installation, when such services are available from existing on-base institutions, shall be approved by the DoD Component headquarters only after consultation with the Comptroller, Department of Defense (C, DoD). 3. Financial institutions authorized to locate on DoD installations shall be provided logistic support as set forth in DoD Instructions 1000.10 and 1000.12 (references (b) and (c)). 5 4. Military disbursing offices, nonappropriated fund instrumentalities, and other DoD installation activities shall use on-base financial institutions to the maximum extent feasible and consistent with sound management practice. 5. DoD personnel who tender uncollectible checks, overdraw their accounts, or fail to meet their financial obligations in a proper and timely manner damage their credit reputation and affect the public image of all DoD personnel. Furthermore, losses sustained by financial institutions on DoD installations as a result of these actions increase operating costs and may reduce the institutions' viability. Such added operating costs must be borne by other customers and, in some cases, may increase the cost to the Government 0 of providing on-base financial services. Military financial counselors or legal advisors shall recommend workable repayment plans that avoid further endangering credit ratings and careers of affected personnel. Counselors shall ensure that such personnel are aware of the stigma associated with bankruptcy and shall recommend its use only as a last resort, when no other alternative will alleviate the situation. 6. It is DoD policy to support the delivery of retail financial services on DoD installations via automated teller machines (ATMs) that have connectivity to national networks; e.g., the Armed Forces Financial Network. 2
a. Each on-base financial institution is encouraged to offer ATM service with network connectivity. Proposals to install ATMs from on-base financial institutions shall be considered under provisions stated in DoD Instructions 1000.10 and 1000.12 (references (b) and (c)). b. Proposals to install ATMs from other than on-base financial institutions may be considered under the following circumstances: July 26, 1989 1000.11 (1) If the proposal offers ATM service with network connectivity, the installation commander shall determine whether the existing ATM(s) on the installation has network connectivity. (2) If the existing ATM(s) provides network connectivity, no further action is appropriate. If the existing ATM(s) does not provide network connectivity, the on-base financial institution shall be given up to 6 months to provide such connectivity. (3) If ATM service is unavailable or if existing on-base ATM service does not provide network connectivity within the 6-month period, the installation commander may seek ATM service with network connectivity from another financial institution. Lease of space for ATM installation would be under terms as stated in DoD Instructions 1000.10 and 1000.12 (references (b) and (c)). 7. The termination of operations by an on-base financial institution shall be initiated by a DoD Component only under one of the following conditions: a. The mission of the installation kas changed, or is scheduled to be changed, thereby eliminating or substantially reducing the requirement for financial services. b. Active military operations prevent continuation of on-base financial services. c. The performance of the financial institution in providing services is not satisfactory according to standards ordinarily associated with the financial services industry or is inconsistent with the procedures prescribed in DoD Instructions 1000.10 and 1000.12 (references (b) and (c)). Termination actions begun on the basis of inadequate performance shall be substantiated by sufficient evidence. Such actions shall be coordinated with the appropriate regulatory agency and the Comptroller of the Department of Defense before being carried out. E. RESPONSIBILITIES 1. The Comptroller of the Department of Defense (C, DoD) shall: a. Develop and monitor policies and procedures governing establishment, operation, and termination of financial institutions on DoD installations. b. Monitor industry trends, conduct studies and surveys, and facilitate appropriate dialogues on banking and credit union arrangements and cost-benefit relationships, coordinating as necessary with DoD Components, financial institutions, and trade associations. 3 0I
c. Maintain liaison, as appropriate, with financial institution regulatory agencies at Federal and State levels. 4 d. Maintain liaison with financial institution trade associations, leagues, and councils in order to interpret DoD policies toward respective memberships and to aid in resolving mutual concerns affecting provision of financial services. e. Coordinate with the Assistant Secretary of Defense (Force Management and Personnel) (ASD(FM&P)) on all aspects of morale and welfare and with the Assistant Secretary of Defense (Production and Logistics) (ASD(P&L)) on all aspects of logistic support for on-base financial institutions. f. Takelfinal action on requests for exceptions to this Directive. 2. The Assistant Secretary of Defense (Production and Logistics) (ASD(P&L)) shall develop and monitor policies and procedures governing logistic support furnished to financial institutions on DoD installations, including the use of DoD real property and equipment. 3. The Assistant Secretary of Defense (Force Management and Personnel) (ASD(FM&P)) shall advise the C, DoD, on all aspects of on-base financial institution services that affect the morale and welfare of DoD personnel. 4. The Heads of DoD Components shall: a. Take action on requests to establish or terminate financial institution operations on respective installations subject to DoD Instructions 1000.10 and 1000.12 (references (b) and (c)). b. Supervise and encourage the use of financial institutions on DoD installations as a means to: (1) Facilitate convenient, effective management of the appropriated, nonappropriated, and private funds of on-base activities. (2) Assist DoD personnel in managing their personal finances by participating in direct deposit programs and regular savings plans. Use of on-base financial institutions shall be on a voluntary basis and should not be urged in preference to, or to the exclusion of, other financial institutions. c. Recognize the right of military personnel and civilian employees to organize and join credit unions formed under duly constituted authority, and encourage the application and expansion of the principles of the credit union movement throughout the DoD establishment. d. Encourage and assist duly chartered financial institutions to provide complete financial services on DoD installations where there is a demonstrated need for such services. e. Establish liaison, as appropriate, with Federal and State regulatory agencies and financial institution trade associations, leagues, and councils. f. Provide debt processing assistance to on-base financial institutions in accordance with the Privacy Act guidelines in enclosure 3. 4
July 26, 1989 1000.11 F. EFFECTIVE DATE AND IMPLEMENTATION This Directive is effective immediately. Forward two copies of implementing documents to the Comptroller of the Department of Defense within 120 days. Deputy Secretary of Defense Enclosures - 3 1. References 2. Definitions 3. Guidelines for Application of the Privacy Act to Financial Institutions on DoD Installations Accesion For NTIS CRA&I OTIC TAB Jjstf,cabo _. B y......... D, - I A, " I i: Diit -pcl or a,'
Jul 26, 89 1000.11 (Encl 1) REFERENCES, continued I (e) DoD Directive 4100.15, "Commercial Activities Program," March 10, 1989 (f) Title 12, United States Code, Section 1751 et seq., Federal Credit Union Act of June 26, 1934, as amended (g) DoD Directive 5400.11, "Department of Defense Privacy Program," June 9, 1982 (h) Title 5, United States Code, Sections 552a(e)(3), 552a(a)(1), 552a(m), and 552(e) (i) 01IB Circular A-108, "Office of Management and Budget Guidelines for Privacy Act Implementation," July 1, 1975 (j) DoD Directive 5400.7, "DoD Freedom of Information Act Program," May 13, 1988.4 I 4 1-1
July 26, 1989 1000.11 (Encl 2) DEFINITIONS 1. Automated Teller Machine (ATM). An electronic machine that dispenses cash, and may perform such other functions as funds transfers among a customer's various accounts and acceptance of deposits. Equipment generally is activated by a plastic card in combination with a personal identification number (PIN). Shared access refers to ATMs that may be used by cardholders of more than one financial institution. 2. Bank and/or Credit Union Liaison Officer. A commissioned officer or DoD civilian employee of equivalent grade appointed by an installation (military community) commander to work with officials of the servicing financial institution and its clients. A noncommissioned officer may be appointed if he or she is the senior financial management official at the installation. 3. Banking Facility. A banking office located on a DoD installation and operated by a financial institution that the Treasury Department has specifically authorized, under its designation as a "depository and financial agent of the U.S. Government," to provide certain banking services at the installation. Such offices may be either self-sustaining or nonself-sustaining. Also known as a military (or community) banking facility. 4. Banking Institution. The organization that is chartered to operate a banking office on a DoD installation. For purposes of this Directive and DoD Instructions 1000.10 and 1000.12 (references (b) and (c)), the term also includes savings associations as defined herein. 5. Banking Office. A banking facility, branch bank, or independent bank operated by a banking institution on a DoD installation. Also includes savings associations and their branches operated on a DoD installation. 6. Branch Bank. A separate unit chartered to operate at an on-base location geographically remote from its parent banking institution. 7. Credit Union. A cooperative nonprofit association, incorporated under the Federal Credit Union Act, 12 U.S.C. 1751 et seq. (reference (f)), or similar State statute, for the purposes of encouraging thrift among its members and creating a source of credit at a fair and reasonable rate of interest. 8. Credit Union Branch. A subsidiary office of an existing full-service credit union. 9. Credit Union Facility. A facility employing a communications system with the parent credit union to conduct business at remote locations where a fullservice credit union or credit union branch is impractical. Credit union facilities need not provide cash transaction services, but must disburse loans and shares via check or draft and provide competent financial counseling during normal working hours. 10. Defense Credit Union. A State or federally chartered credit union with a field of membership composed primarily of DoD personnel. 2-1.. I
11. Discriminat 4 on. Any diffprpnt:al treatment in provision of,7er--ces, including loan services, by a financial institution to DoD perzornn& ana their dependents on the basis of race, color, religion, national origin, sex, marital status, age, rank, or grade. However, if uniformly applied, the amount of 4 credit extended may be directly based upon an applicant's total income. 12. DoD Personnel. All military personnel; civil service employees; other civilian employees, including special Government employees of all offices, Agencies, and Departments performing functions on a DoD installation (including nonappropriated fund instrumentalities); and their dependents. On domestic DoD installations, retired U.S. military personnel and their dependents are included. 13. Domestic DoD Installation. A military installation located within a State of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. 14. Fair Market Rental. A reasonable charge for on-base land, buildings, or building space (i.e., property). Rental is determined by a Government appraisal, based on comparable properties in the local civilian economy. However, the appraiser shall consider that on-base property may not always be comparable to similar property in the local commercial geographic area; for example, limitation of usage and access to the financial institution by persons other than those on the installation, proximity to the community center or installation business district, the Government's right to terminate the lease or take title to improvements constructed at the financial institution's expense, and the limited consumer environment of a DoD installation. 15. Federal Credit Union. A credit union established and operated under authority granted by the Federal Credit Union Act, 12 U.S.C. 1751 et seq. (reference (f)), and chartered, supervised, and periodically examined by the National Credit Union Administration. 16. Field of Membership. The group of people entitled to credit union membership because of a common bond of occupation or association; or employment or residence within a well-defined neighborhood, community, or rural district. The field of membership is defined in the credit union's charter by the Federal or State regulatory agency. 17. Financial Institution. This term encompasses any banking institution, credit union, and subordinate office or facility, each as separately defined herein. 18. Financial Services. Those services commonly associated with financial institutions in the United States, such as checking, share and savings accounts; funds transfers; sales of official checks, money orders, and travelers checks; loan services; safe deposit boxes; trust services; sale and redemption of U.S. Savings Bonds; and acceptance of utility payments. 19. Full-Service Credit Union. A credit union that provides full-time counter transaction services, to include cash operations, and is staffed during normal working hours by - loan officer, a person authorized to sign checks, and a qualified financial counselor. In overseas areas, "full service" includes cash operations where not prevented by: a. Host-country law or regulation, or 2-2
July 26, 1989 1000.11 (Encl 2) b. Physical security requirements that cannot be resolved by the credit 0 union or local command. 20. Full-Time. Refers to a banking facility or credit union branch that operates at least 5 days a week. 21. Independent Bank. A bank specifically chartered to operate on a DoD R installation, whose directors and officers usually come from the local business and professional community. Such operations are thus differentiated from countywide or statewide branch systems consisting of a head office and one or more geographically separate branch offices. 22. Malpractice. Any unreasonable lack of skill or fidelity in fiduciary duties, or the intentional violation of an applicable law or regulation, or both, that governs the operations of the financial institution. A violation shall be considered intentional if the responsible officials know that an action or inaction violated a law or regulation. 23. National Bank. An association approved and chartered by the Comptroller of the Currency to operate a banking business. 24. On-base. Refers to physical presence on a domestic or overseas DoD installation. 25. Operating Agreement. A mutual agreement between the DoD installation commander and on-base financial institution regarding their relationships. 0 26. Overseas DoD Installation. A military installation (or community) located outside the States of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. 27. Part-Time. Refers to a banking facility or credit union branch that operates fewer than 5 days a week, exclusive of additional payday service. 28. Regulatory Agency. Includes the Office of the Comptroller of the Currency; the Federal Deposit Insurance Corporation; the Federal Home Loan Bank Board; the several Federal Reserve Banks and the Board of Governors of the Federal Reserve System; the National Credit Union Administration; the various State 0 agencies and commissions that oversee financial institutions; and, for banking facilities, the Fi-al Assistant Secretarv of the Treasury. 1 29. Savings Association. A State or federally chartered mutual or stock savings institution, to include savings and loan associations, building and loan associations, homestead associations, and savings banks. 0 30. Share Draft. A negotiable or nonnegotiable draft or other order prepared by a credit union member and used to withdraw shares from a shdre draft account, normally through the commercial banking system. 31. State Bank. An institution, organized and chartered under the laws of a State of the United States, to operate a banking business within that State. 2-3
32. State Credit Union. 'n institution, organized and chartered under the laws of a S-tate ot the United States, that operates under the same general principles as a Federal credit union and is supervised and examined by a State 4 regulatory agency or commission. I 2-4 0 9 0 0
7S July 26, 1989 1000.11 (Encl 3) GUIDELINES FOR APPLICATION OF THE PRIVACY ACT TO FINANCIAL INSTITUTIONS ON DOD INSTALLATIONS 0 A. The following p'-delines govern application of DoD Directive 5400.11 0 (reference (g)) t,, those financial institutions that operate under this Directive: 1. Financial institutions and their branches and facilities operating on DoD military installations do not fall within the purview of 5 U.S.C. 552 et seq. (reference (h)). a. These financial institutions do not fit.he definition of "agency" to which the Privacy Act applies: "...any executive department, Military Department, Government corporation, Government-controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or an independent regulatory agency" (5 U.S.C. 552(e) and 552a(a)(1)) (reference (h)). b. Nor are they "government contractors" within the meaning of section 552a(m) of reference (h), as they do not operate a system of records on behalf of an agency "...to accomplish an agency function." According to the Office of Management and Budget Privacy Act Guidelines (reference (i)), the provision relating to Government contractors applies only to systems of records "...actually taking the place of a Federal system which, but for the contract, would have been performed by an agency and covered by the Privacy Act." Clearly, the subject institutions do not meet these criteria. c. Since the Act does not apply to them, these financial institutions are not required to comply with Section 552a(e)(3) of reference (h) in obtain- 0 ing and making use of personal information in their relationships with personnel authorized to use such institutions. Thus, these institutions are not required to inform individuals from whom information is requested of the authority for its solicitation, the principal purpose for which it is intended to be used, the routine uses that may be made of it, or the effects of not providing the information. There also is no requirement to post information of this nature within on-base banking and credit union offices. 2. The financial institutions concerned hold the same position and relationship to their account holders, members, and to the Government as they did before enactment under OMB Circular A-1O8 (reference (i)). Within their usual business relationships, they still are responsible for safeguarding the infor- 0 mation provided by their account holders or members and for obtaining only such information as is reasonable and necessary to conduct business. This includes credit information and proper identification, which may include social security number, as a precondition for the cashing of checks. 3. Financial institutions may incorporate the following conditions of disclosure of personal identification in all contracts, including loan agreements, account signature cards, certificates of deposit agreements, and any other agreements signed by their account holders or members: 3-1
I hereby authorize the Department of Defense and its various Components to verify my social security number or other identifier and disclose my home address to authorized (name of financial institution) officials so that they may contact me in connection with my business with (name of financial institution). All information furnished will be used solely in connection with my financial relationship with (name of financial institution). When the financial institution presents such signed authorizations, the Military Commands or installations shall provide the appropriate information. 4. Even though the agreement described in subsection A.3., above, has not been obtained, the Department of Defense may provide these financial institutions with salary information and, when pertinent, the length or type of civilian or military appointment, consistent with DoD Directives 5400.11 and 5400.7 (references (g) and (j)). Some examples of personal information pertaining to DoD personnel that can normally be released without creating an unwarranted invasion of personal privacy are name, rank, date of rank, salary, present and past duty assignments, future assignments that have been finalized, office phone number, source of commission, and promotion sequence number. 5. When DoD personnel with financial obligations are reassigned and fail to inform the financial institution of their whereabouts, they should be located by contacting the individual's last known commander or supervisor at the official position or duty station within that particular DoD Component. That commander or supervisor shall either furnish the individual's new official duty location address to the financial institution, or shall forward, through official channels, any correspondence received pertaining thereto to the individual's new commander or supervisor for appropriate assistance and response. Correspondence addressed to the individual concerned at his or her last official place of business or duty station shall be forwarded as provided by postal regulations to the new location, but the individual may choose not to respond. However, once an individual's affiliation with the Department of Defense is terminated through separation or retirement, the locator assistance the Department may render in the disclosure of home address is severely curtailed unless the public interest dictates disclosure of the last known home address. The Department of Defense may, at its discretion, forward correspondence to the individual's last known home address. The individual may choose not to respond; and the Department may not act as an intermediary for private matters concerning former DoD personnel who are no longer affiliated with it. B. Questions concerning this guidance should be forwarded through channels to the Deputy Comptroller (Management Systems) (DC(MS)), Office of the Comptroller of the Department of Defense, Pentagon, Washington, DC 20301-1100. 3-2 I 0 0 0 0 0 0 0